Renowned Exploration Analyst and Geologist Brent Cook produces
newsletter, covering geology and discoveries worldwide. In this
interview, Brent catches up with former EI Writer Paul van Eeden. A
fresh addition to Miranda Gold Corp.'s board of directors, Paul
offers characteristically frank insights into gold and precious
metals and shares several choice companies with
The Gold Report.
In January of 2008 Paul van Eeden stood on the stage as the
headline speaker at the Cambridge House Investment Conference and
said "sell everything." He didn't say it just once but several
times during his 25-minute standing room only speech. It was a very
sobering and prescient talk that earned him no new fans at the
Up until that speech, Paul had been writing a weekly investment
newsletter in which he discussed macro-economic issues, money
supply, and the gold price. I worked with Paul on that letter,
supplying much of the background technical and geological analysis
for junior mining and exploration stock picks. In February of 2008
I bought the letter from Paul and re-branded it as
. For long-term subscribers that know Paul from those days and have
subscribers, this is an opportunity to update you on Paul's
endeavors and thank you for sticking with us, something I very much
appreciate given how quickly things got bad in the financial world
I first met Paul in 1997 when I came on board as a mining
analyst to Rick Rule and Global Resource Investments-just after the
Bre-X scandal blew up the mining sector. Paul and I have worked
together since on a number of projects; his business sense and
integrity are irreproachable.
Last week Paul joined the board of
Miranda Gold Corp. (TSX.V:MAD)
and it seems like a good time to catch up with him by way of the
Paul, you have effectively been out of the public markets since
early 2008; what have you spent your time doing?
Paul van Eden:
Well, it's true that I have not been very active since 2008, but I
have not been completely out of the market either. I have kept an
eye on developments and stayed in contact with several companies of
which I am still a shareholder. I am particularly impressed with
the creation of shareholder value at
Altius Minerals Corporation (TSX.V:ALS)
over the past 18 months.
In February of this year Altius made a CAD$27 million gain on
its investment in IRC. The long and short of it is that Altius made
a 78% gain on its investment in less than eight months, and to make
that kind of gain in such a short period of time, and on a sizeable
investment, is truly outstanding. Had this not been the third time
Altius made a spectacular return on its capital for investors, one
could understandably think it was luck.
The fourth such potential gain is already in the works.
Earlier this year Altius sold its Kami iron ore property in
Alderon Resource Corp. (TSX.V:ADV; OTCQX:ALDFF)
in exchange for approximately 32 million shares of Alderon. Alderon
is currently trading for around CAD$1.65 a share, which means
Altius' Alderon shares are worth approximately CAD$53 million. The
cost to Altius: under CAD$2 million.
Add to this the CAD$208 million they made on a CAD$660,000
investment in Aurora Energy, and the 12 million shares of Rambler
Metals they own, that are valued at approximately CAD$5.4 million,
and that cost them only CAD$580,000. That is why Altius is still
the single largest position in my portfolio. . .by a wide
That is also why Altius has been a long-term member of our EI
portfolio. What prompted your decision to join the Board of
Directors of Miranda Gold?
I was a shareholder of Miranda even before Ken Cunningham, the
current president and CEO, became the president and CEO. As I
recall, you had introduced me to Ken and I suggested to Miranda
that they appoint him as president and CEO. That was back in
November 2003, which means we both have quite a history with the
company. I have come to know Ken quite well since then and I can
tell you that I am grateful for the introduction. Ken is an
outstanding human being and I have the utmost respect for his
professionalism and skill. Under Ken's stewardship Miranda Gold has
become a highly regarded grassroots exploration company.
Over the years Ken and I talked about me joining Miranda's board
a few times, but I was not ready to take the step. While I was
writing a newsletter I did not want to muddy the waters. My
newsletter, like yours, was a running commentary on what I was
doing with my own money. It was very simple, and I wanted to keep
things that way, without any conflicts of interest such as
directorships or consulting agreements.
During my investment career I have been a stockbroker, analyst,
newsletter writer, consultant and, throughout it all, an investor.
Looking forward I intend to focus more on investments and that has
opened up the possibility of accepting a limited number of board
positions. But I would only be interested in joining the board of a
company in which I had a significant share position.
As you know, I sold almost all my investments in early 2008. I
have added a few back, but I have been very selective. There are,
however, several opportunities in the market where company
valuations appear completely out of whack with prevailing metal
prices or their peers. I have recently made a few sizeable
investments in companies that I believed to be undervalued, not
just on a relative basis, but on an absolute basis. However, I am
With hindsight it's easy to see that I should have joined
Miranda's board in November 2008, when the stock was at its lowest.
Had I made the investment then, instead of now, I would already
have doubled my money. But if we had hindsight, investing just
wouldn't be as much fun.
Miranda has an exploration team second to none, and an
outstanding CEO. Throughout my career I have always worked on the
principle that if you surround yourself with good people then good
things will happen to you. My investment philosophy is still the
same and the reason I agreed to buy shares of Miranda, and join the
company's board of directors, is because these are genuinely good
people and I am pleased to be associated with them.
The size and quality of Miranda's inventory and the ability of
its mineral exploration team to generate more projects make this a
compelling investment. The way I see it, if the stock price goes
down, I will be able to average down my cost basis and if the stock
price goes up, I will be making a profit on the shares I own.
Either way is okay with me. Mineral exploration is an uncertain and
risky business, but if you don't own the companies that generate
ideas and explore for minerals you cannot benefit from the
stupendous creation of value when an economic discovery is
Does this mean you are bullish on gold and other metals?
No. On the contrary, I am actually very bearish. But I will have to
explain: At heart I am a value investor, despite the fact that in
practice I am a speculator. Actually, I became a speculator because
for most of my career there have only been very brief periods
during which the market offered true value. I started investing in
the mid-1990s and was immediately confronted by the Internet boom
and tech bubble. When that crashed I had hoped for a period of
sanity during which value investors could accumulate assets, but
Greenspan had other ideas and promptly inflated a debt bubble that
spilled over into real estate, stocks and just about everything
else. When that crumbled in 2008, I was again hoping for sanity to
prevail but, alas, no. Quantitative easing and almost zero percent
interest rates are keeping the party going. Everyone at this party
is now so drunk that they have to lie down to stagger.
From a fundamental perspective I think that metal prices, the
S&P500, the Dow Jones Industrials, bonds and yes, even gold,
are all grossly overpriced. But that doesn't mean their prices will
imminently decline. As my good friend and mentor, Rick Rule, has
often told me: "That which is inevitable is not necessarily
The reason the market is so ridiculously overpriced (IMHO) is
that people don't know how to quantify the money supply and
inflation, and they are concerned about the talk of quantitative
easing, which is equally unquantifiable by most. This environment
of uncertainty leads to speculation, and in most cases the object
of such speculation is gold and other "hard assets."
On the other side of the spectrum are those who believe the
Brazil, Russia, India And China (BRIC) economies are going to
create such enormous demand for raw materials and finished goods
that they bid the prices of commodities sky high. Most of these
commodities are also part of the "hard assets" that the fearful
group is buying. Mix the two together and you get a recipe for
Again, as I said, just because I think metals and other
commodities are overpriced does not mean their prices are going to
fall anytime soon. The current environment, which is conducive to
higher prices, may last quite a while and metal prices could
increase substantially before they return to something even
remotely resembling sanity.
That's not the same as being bullish; it's merely recognizing
that prices can go higher. I would not in the least be surprised to
see metal prices (including gold) fall by 50%. Nor would I be
surprised if they increased by 50%. Instead of worrying about what
prices are going to do I focus on what I am going to do in response
to prices. If prices fall-I buy. If prices rise-I sell.
Another way I insulate myself from the gyrations of the market
is by owning businesses and not trading stocks. I view my portfolio
as a series of fractional ownerships in a selection of businesses.
If my fractional ownership warrants it, and I get along with the
people, I may consider a directorship. This is what happened with
I have been involved in mineral exploration in one way or
another for the past 15 years. I thoroughly enjoyed it, and I will
hopefully be able to remain involved with mineral exploration for
many years to come. I have, however, finally reached the stage
where I believe that my involvement can span both that of an
investor and as a director. Although primarily I will always be an
Yes, a very thorough investor as I once again experienced on our
trip through the Yukon a few weeks back.
As you know, I do a lot of boots-on-the-ground due diligence-you
and I have visited many countries and countless projects together.
But I am not a geologist and I don't pretend to be one either; I am
acutely aware of my limitations. While I find that my own hands-on
due diligence is invaluable, I have also come to rely heavily on
your expertise and due diligence. I owe much of my success in the
exploration sector to your insights: you have both made, and saved,
me a lot of money. I honestly don't understand how anyone can hope
to succeed in the junior mining sector without the advice of
someone like you who has decades of real experience in the field.
And by "real" experience I mean "real mineral exploration"
experience. I had the opportunity to watch the video you made
during our trip and suggest that anyone reading this interview also
take the time to see how you evaluate exploration properties.
Thanks for the plug, the three-part video (each one better than the
previous) is linked
for anyone who is interested. I look forward to catching up with
you in the future and know subscribers to
appreciate the time you took to talk to us.
Paul van Eeden is President of Cranberry Capital Inc., a
private Canadian holding company. He began his career in the
financial and resource sectors as a stockbroker with Rick Rule's
Global Resource Investments Ltd. in 1996. He has been active in
financing mineral exploration companies and analyzing markets
ever since. Paul is well known for his work on the relationship
between the gold price, inflation and currency markets. His model
for determining the fair value for gold was able to predict both
the run up in the gold price to over $1,000 an ounce between 2001
to 2008, and its subsequent decline to around $750. He also
created a measure called the Actual Money Supply (
) to monitor the real rate of inflation. AMS is crucial to
analyzing real (inflation adjusted) changes in prices and to
calculating the real return on investments.
Brent Cook brings more than 25 years of experience to his
role as a geologist, consultant and investment adviser. His
knowledge spans all areas of the mining business from the
conceptual stage through to detailed technical and financial
modeling related to mine development and production. His
hallmarks include applying rigorous factual analysis to the
projects and companies he examines, and augmenting his analysis
with on-site field evaluations. He has worked in more than 60
countries on virtually every mineral deposit type. Brent's
newsletter focuses on early-discovery, high-reward
opportunities primarily among junior mining and exploration
companies. Paul van Eeden, who produced Exploration Insights'
predecessor publication, claims Brent "has always been my primary
source of information and intelligence with respect to mineral
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